Time for a Debt Haircut
   In most other respects, though, the state of Ireland is similar to the predicament that 1 in 5 American homeowners with mortgages find themselves in—owing more than their property is worth, so burdened with debt that the economy is stalled by their inability to borrow and spend as they used to. With homeowners, at least, there's foreclosure, which is devastating but creates hope that debtors might regain something close to a normal life, albeit as renters. Those determined to stay in their own homes need something lenders have thus far been reluctant to offer: a reduction in principal, a lessening of the debt. Another word for it is a haircut. The entire taxpaying public of Ireland, it turns out, needs the same thing done to the debts it acquired in saving the nation's reckless banks. A growing chorus of economists, including Carmen Reinhart of the University of Maryland, is making this argument. But policymakers have shown few signs of even considering it. Why?